With the average American carrying $44,000 in debt, if you are not a debtor, you must be, well, very fortunate. You must have been money-smart to either avoid debt altogether or have overcome this problem. If you are not that fortunate, don’t worry. Just start being money-smart now and implement clear debt solutions to overcome your debt. Millions have faced debt, and millions have overcome it. If you are looking around for help with debt, look for these self-help tips on how to solve debt problems:
Face it. The first step is always the most difficult - you must have gotten this advice as a child. Now, it is time to accept reality, and face your debt. It is easy to ignore or deny debt, project that everything is fine on the financial front and find ways to avoid creditor calls. But for how long? Ignoring your problems only allows them to grow and grow until bankruptcy is your only solution. It is indeed very difficult to accept the grave reality of debt, but once you do, you will feel lighter, relieved and able to brace yourself for the next step towards clear debt solutions.
Assess your debt. Now that you have accepted the problem, it is time to begin embark on a solution for debt. To do that, you must gauge the problem comprehensively. Sit down with a pen and paper and all information about your pending bills. Write down:
a. Creditor information
b. Amount due
c. Interest rate
d. Period for repayment
e. Minimum monthly payment
It can come as a shock to you that the situation is even worse than you thought. But again, to climb a rock you have to first look up to ascertain its height. So be happy that at least from this point, the situation will not get any worse; it will only change for the better.
Budget. This is single most vital weapon against debt. Any advice on how to solve debt problems or how to stay from debt will surely include budget as a factor. An effective budget can be formulated in three simple steps:
a. List all sources of income. This includes your salary, income from rent if you have it, income from part time jobs, etc.
b. List all expenses for one month. This includes fixed expenses and an estimate of variable expenses. Make a comprehensive list of expenses - include food, water, utility bills, insurance premiums, etc.
c. From the total income, deduct the money that you pay for expenses. This gives you an idea of how much you have left to repay your debts.
You can also make use of online help related to smart budgeting.
Earn more, save more. Your debts cannot wait until your next salary increase. Now that your budget shows how much you need to make ends meet, you need additional money to repay your debts. This can be a two-pronged approach - earn more and save more.
Earning more may mean looking for a better paying job, taking on part-time jobs, doing jobs on the weekends, etc. Explore all options, talk to your friends and peer group for suggestions, evaluate the options and implement the plan. Keep aside whatever additional money trickles in to repay the debt.
The other clear debt solution is to practice saving. Saving may not only mean keeping aside some amount from your monthly budget, but can also mean savings that are other than monetary. Save on energy consumption, avoid eating out, resist the temptation of sales at stores, etc. A little effort on this front could leave you happy with additional money left in your wallet at the end of the month. This will again be a small but significant contribution towards debt repayment. Search online for effective tips on saving money and energy.
Contact your creditors. One last but very vital step in solving debt problems is to contact your creditors. This is a brave step and may require a little more effort on your part to persuade creditors to cooperate with you. Contacting creditors assures them that you are not running away with their money. Appraise them of your financial position, and, if required, show them your budget too. Then try to come to an agreement with them about a payment plan that fits your budget. And once this is done you just need to follow your budget and repayment plan carefully. The harassing creditor calls should no longer trouble you.
Ready to start? Millions have done it, and you can too! Finding a solution for debt - yes, it’s possible!